Wealth Management vs Financial Planning

Authored BY: Ajit Panicker

Wealth management according to Wikipedia is "Private wealth management (PWM) is the term generally used to describe highly customized and sophisticated investment management and financial planning services delivered to high net worth investors. Generally, this includes advice on the use of trusts and other estate planning, vehicles, business succession or stock option planning, and the use of hedging derivatives for large blocks of stock."

Financial Planning according to FPSB India is " "Financial Planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a house, saving for your child's higher education or planning for retirement. The Financial Planning Process consists of six steps that help you take a 'big picture' look at where you are currently. Using these six steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals. The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans. "

The definition of both these diciplines of the financial field are too close and yet too far. Where wealth management is manging the funds, the wealth of the High networth individuals of the scoiety, financial planning is about helping all kinds of clientele meet their lif goals with their available resources by pruning and by scissoring at many places.
Wealth management is about helping the client accumulate wealth through all those investment tools which provide great returns, while financial planning will see to it that the client's desired goals are met, but all this is done in a very organized and systematic manner by examining the present status and then strategising.
The focus in the financial planning process is to help client achieve " FINANCIAL FREEDOM"

The  three basic questions that you will answer during financial planning:

• Where are you today? What is your current financial situation?
• Where do you want to get to? What is your vision of your future financial situation?
• Will you be able to get there? How do you plan to achieve your vision?

During the financial planning process you analyze what your financial needs and goals are. Then, you quantify in money terms what resources you need to meet those goals, and quantify the time period during which you want to achieve these goals. Finally, you write an action plan on what you need to fulfill your plan in terms of what products to buy and what types of savings to make.

What are MIPs and how are they different from FDs?

Authored By: Ajit Panicker

Monthly Income Plans, or MIPs, are hybrid instruments that invest a small part of their portfolio (around 5-25 %) in equities and the remaining (75-95%) in debt and money market instruments. Their portfolio is essentially biased towards debt, but a small exposure to equity is added as a kicker. MIPs aim to give a monthly income to investors. The investor can decide the periodicity at which he wants dividends, which could be monthly, quarterly, half-yearly or annually. In addition to this, a growth option is also available, where gains come in the form of capital appreciation.


MIP returns are market-driven. That means, the fund manager is under no obligation to declare a monthly dividend, though most fund houses try their level best to declare dividends regularly. This is the main difference between MIPs and fixed deposits (FDs) that offer assured interests. However, compared with FDs, MIPs are tax-efficient as dividends declared under MIPs are tax-free.

Typically, retired people or those nearing retirement (in their late 50s) can opt for MIPs as they can generate an adequate income flow that can help them meet their monthly expenses. However, investors should remember that dividends are not guaranteed. If the stock market runs into rough weather, the fund manager may not declare dividends for that period. This is a risk the investor should be able to factor in. In short, MIPs can only be an additional source of income to the regular income form pension, annuity and so on.

Apart from retirees, novices to the market who wish to take a small exposure to equity can also consider investing in equity. The modest equity exposure will generate extra income, while the debt portion will preserve the capital. They can also pocket extra returns, thanks to the stocks in the portfolio. However, always remember that equity is a risky investment option, despite the fund manager’s best effort it could underperform in certain periods due to bad market conditions.

Saving today will create an excellent Future tomorrow- My Life experience

Authored by: Ajit Panicker

Yesterday in the morning in the gym, while working out, I was having a discussion with my neighbour about the spending patterns of consumers and what makes them buy the most frivolous of things. He said there was a time when he would himself buy things on a whim, especially through a credit card. Now, he says, he has turned over a new leaf. He has cancelled his second gym membership that he had paid thousands for, reduced eating in restaurants and has started investing in various plans in a systematic manner. “Live simply today to live lavishly tomorrow,” he calls this plan.
My friend, unknowingly, has managed to save more in three months, than he would usually have in several months, if he had continued his lifestyle. He got me thinking. Can it be that uncomplicated to save for the future? The answer is Yes. When you get money, do you save first or spend first or spend by borrowing?

Usually, when we spend on buying things, we end up borrowing. You may think, “How can I borrow when I am spending from my own pocket?” What you don’t realise at that moment is that every penny you spend on buying something that is more of a want than a need, you are borrowing money from yourself . You may think that you don’t have to pay yourself back, but this tendency pulls you away from your life dreams and goals since you do not have the money to save or invest.

An associate of mine recently presented me a study that analysed spending patterns.
An important fact put forth was that individuals forgo long term goals for instant gratification. Most of us just get a certain “high” while buying a particular product for e.g. a new pair of shoes, or going to the best restaurant in town. This habit increases borrowings.

A way to break this pattern is by making a clear demarcation between what you want and need. They are always two separate things. Though instant gratification is fun for the moment, on a long-term basis, it might not be what you need. Commit yourself towards creating reserves for your future, instead of just thoughtlessly spending money.

Investing for the future is not an easy task. I often suggest a simple trick to friends which helps them stick to their plan – I ask them to create a collage of pictures of their dreams and desires. It could have pictures of your dream house, holiday, retirement or anything thing else that you are working to achieve.

This will provide you the motivation that you need to turn these dreams into reality . But remember to not shape your future by borrowing. Make the distinction between good and bad borrowing. Any borrowing that can help you buy/build an appreciating asset (like house) is good borrowing.

Another important lesson that you need to understand is that you will need to downgrade on your current needs to move in on your future. You can cut down on some unwanted expenses and instead use that amount in a financial plan that can help you achieve your dream, goals and plan for emergencies.

The idea of downsizing now is to create a foundation to stabilise your future. Over time, this will help you become financially independent. And your dreams will be your own, no matter what...

PPF- Best instrument to create corpus , without paying TAX

 Authored by: Ajit Panicker

PPF account is the best investment option where you can put good amount every year and build a huge corpus without paying taxes. With a little planning, it can be an important part of your financial portfolio. Here are a few tips that will help you make the most of this option:

Maximise limit:

The 8.8% compounding interest you will be earning from now on, the latest news today declared , on the balance can work wonders for you, especially because a PPF account is a long-term investment. There is an annual limit of Rs 1,00,000 that one can invest in the PPF. You may feel it is a waste to be investing Rs 1,00,000 in this option when your Rs 1 lakh tax saving limit under Section 80C has already got exhausted. But don't let the tax savings alone guide your decision. Invest as much in PPF as you can afford to. If you contribute Rs 1,00,000 a year to your PPF for 15 years, your investment would grow to a gargantuan Rs 35.43 lakh on maturity.
And remember, this is tax-free money. In the 30% tax bracket, this is equivalent to receiving almost 12.8% interest on a bank fixed deposit. “The PPF offers the highest post-tax returns among all fixed income options since no tax is levied on the investment, income and withdrawals,”

Distribute income:

There are benefits in store if you open a PPF account in the name of your spouse or child. Tax laws say that if any money gifted to a spouse is invested, the income from that investment is clubbed with the income of the giver. But since PPF income is tax free, it will not push up his tax liability. This way, you can invest more than Rs 1,00,000 a year in this tax-free haven and benefit from its various advantages.

This strategy does not work in case of minor children though. You can open a PPF account in the name of a minor child but the combined contribution to your and your child's account cannot exceed Rs 1,00,000 a year.

Invest for children:
However, if the child is over 18 years, up to Rs 1,00,000 a year can be invested in his name separately. The taxman insists on clubbing the income of minor children with that of the parent. But once they turn 18, they can have a separate income. “A PPF is an ideal way of building a fund for your child's educational needs instead of falling for all the ‘high-commission-paying’ child plans of insurers,”
 “In a child plan, you are not sure of the final returns.

What is micro-insurance?

Microinsurance is one of the many ways in which the lower sections of the society which are deprived of even the basic needs of their families, are protected for the perils they can encounter. This is done by providing them protection inform of insurance cover where the regular premium is very low and is proportionate to the risk and its cost involved.
This arrangement is being made so that every section of the society can be adequately insured according to their living expenses and which can be insured by paying very small amount of premiums.
Microisnurance provides greater economic and psychological security to the poor as it reduces the exposure to multiple risks and cushions the impact of the disaster.
There is an overwhelming demand  for social protection among the poor

Microinsurance in conjunction with microsavings and micro credit would therefore go a long way in keeping this segment away from the poverty trap and would truly be an integral component of financial inclusion.

Microinsurance is synonymous to community-based financing arrangements, including community health funds, mutual health organizations, rural health insurance, revolving drugs funds, and community involvement in user-fee management. Most community financing schemes have evolved in the context of severe economic constraints, political instability, and lack of good governance. The common feature within all, is the active involvement of the community in revenue collection, pooling, resource allocation and, frequently, service provision.

Financial Planners are your Financial doctors, specialists in the Financial Field

Authored By: Ajit Panicker

In past decade and strongly in past few years the banking and the financial markets, the regulations and the investors have all become very active and alert. If i talk about insurance, for about 60 years Life insurance co. Ltd(LIC) was synonymous with insurance until early 2000's when private insurers arrived in india. Mutual funds became a popular in past 15-20 years, and people have now realized its importance for which the moderate risk takers and all those who want to diversify their investments look towards mutual funds as a good investment option. Stocks have always been an option in this country, but many have burned their fingers and even their homes due to less information about the option or due to wrong guidance. Real estate as an investment option has become public in past decade very strongly. But since time immemorial people have kept land as a great investment option, because this particular option in long term gives good return, inspite of it having a number of timely advantages and disadvantages attached to it.
Gold has always been an option suggested and practiced by our grannies, irrespective of belonging to any part of the world, and has been always more in india. Bank deposits, corprate deposits, saving accounts , post office deposits, have all been investment options or savings options been used since a very long time now.
BUT, these all investment products as they are called has been bought either by your own understanding about them or suggested by agents, advisors or bankers. All the people involved in selling these products are motivated to bring fee income to self or the organizations they are working for, with very minimal concern about the investor or the client.
Here comes the FINANCIAL PLANNER as a FINANCIAL DOCTOR, a specialist in the field, to the rescue of the client. He meets the client with the sole objective to make him realize the importance of planning. Carving a chart and the course of action of how to achieve all the short term, mid term and long term goals , with proper risk adjusted, inflation adjusted and tax adjusted returns to the investments made by the clients. He helps the clients decide their objectives, analyses their current investments, the inflows and the outflows of the cash component, the assets and the liabilities, calculates the present net worth and help the client achieve the desired networth.
He treats the client(patient) with all the ill-investments, replaces them with best options with full analysis. Creates an emergency fund, plans for his retirement, plans his estate, plans his taxes, plans his consumptions and savings pattern, lead them to a disciplined financial life. With all these he finally achieves the FINANCIAL Freedom.
Consult a Financial planner, the specialist

Equity investment - an excellent option to build corpus and achieve the best returns

Authored by: Ajit Panicker

The markets globally have been uncertain from past 4-5 years, coupled with the recession globally. Then countries like US, UK, and many european countries being effected due to sub prime crisis and the recessionary forces. The growth rate was really under the negative quadrant for too long. The political upheavals alongwith economic downturn in middleeast, israel had all contributed to a large extent to make investors largely the retail investors make opinion that in this uncertain market conditions, the equity market should be kept away with. if required one should largely invest in debt market and hence the debt market has been very promising in past 2 years, atleast in india and the subcontinent.
But out of all the investment tools , i feel if one is ready to invest a good amount and want to keep it decently long term for atleast 7 years , EQUITY is the best option. Daily traders would not gain substantially from EQUITY, it is just that they are earning their daily bread and some small gains. But there is an equal chance of all the gains garnered in the past weeks by a washout when the market falls and situation is bearish.

"Siegel is a professor of finance at the Wharton School of the University of Pennsylvania argues  that given a sufficiently long period of time, stocks are less risky than bonds, where risk is defined as the standard deviation of annual return. During 1802–2001, the worst 1-year returns for stocks and bonds were -38.6% and -21.9% respectively. However for a holding period of 10-years, the worst performance for stocks and bonds were -4.1% and -5.4%; and for a holding period of 20 years, stocks have always been profitable."

The above situation is obviously being taken in US, but the STOCKS as an option of investment instrument behaves almost alike in all countries across the globe, differing minutely due to political and economic heat or coldness in the country, which is locally dependent.
What i am putting forward as a financial planner is, that there is no time to enter any kind of market, all situations are to be invested or to come out. No one has ever managed to time the market. But yes the decisions to exit or enter has to be judiciously taken alongwith the equity or for that that matter the financial expert.
India's growth in next 20 years lies in investing in equity for long term minimum 7 years and there is no maximum tenure. Equity does not offer you any lock in period, but this lock in period has to be disciplined by your self.
The returns of the equity in indian market

1.     Top Diversified equity mutual funds have given compounded annual return of more than 35% per annum for the last 10 years.

2.     The annual growth rate of reputed Indian companies is 20-30% p.a.

3.     Diversified Equity Mutual funds invest their money in Indian and multinational companies engaged in manufacturing and services industries. The demand for their products will go on increasing every year because of increase in population and increase in purchasing power in India. The value of their shares will go up when companies make more money, In turn the value of investment made by the mutual funds in these companies will also go up. Hence the investor who has invested in these mutual fund would get handsome returns.

4.     Your money will be invested by the mutual funds in number of reputed Indian and multinational companies engaged in different industries, hence your risk is reduced as you “do not put all your eggs in one basket”

5.     Indian economy is on the growth path according to Indian and international economists

6.     Your investment will be handled by highly experienced and qualified mutual fund managers who have excellent track record

Therefore do not turn your back completely from the share market, and invest in equities wisely under the guidance of financial experts and financial planners.

What is an Ideal Pension Scheme?

 Ideal Pension Scheme should include the below and hence avoids the defects of the existing systems. The Ideal Pension Scheme has the following features:
1. It would be fully portable and independent of any employers.
2. Mandatory minimum contribution related to the employee’s salary and possibly age are made into the scheme. These contributions which attract tax relief will typically be made by both the employee and employer. The contribution rates would be set to reflect the pension level desired in retirement which may, for instance, be related to a forecast of salary at retirement. In particular, there should be no incentives in the system for churning customers between different
pension providers,
2 Data on investment returns, salary growth rates, mortality and the volatilities of these would be used
to estimate the value of the fund needed at the target retirement date to purchase the target pension
annuity. Then working backwards an estimate is made of the required contributions into the scheme.
Clearly the later the starting age the higher the contribution rate. Confidence intervals could also be
estimated, indicating the probabilities of different contributions rates delivering the target pension.
3. Individuals would also be required to buy some related pension benefits such as disability benefits (up to a minimum threshold) and would have options for other benefits such as death-in-service benefits and a spouse’s pension.
4. Both the employee and employer would be free to contribute additional voluntary contributions. Contributions in excess of specific employee and employer limits would not attract tax relief, however. There would be parity of treatment with the employer’s own scheme.
5. The investment income and realised capital gains in the fund would accrue with income and capital gains tax relief.
6. The pension age would be flexible and not necessarily linked to actual retirement.

In other words, an individual could draw the pension without actually having retired. However, the individual would be warned about the dangers of retiring too early and drawing a pension before the normal retirement age would ordinarily be restricted to those who had built up sufficiently large pension funds to provide an
adequate standard of living in retirement.
7. Individuals would be required to have converted a mandatory component of their pension into an annuity at retirement. Individuals would be permitted to purchase a deferred annuity before retirement. The mandatory component of the pension would be fully linked to retail price inflation. The pension would be taxable.
8. Part of the pension entitlement (up to a specified limit) could be taken as a lump sum. The lump sum would be taxable.
9. Pension schemes would operate according to a standardised set of deeds, similar to company articles of association.
10. The scheme would be administered by an independent pension scheme administrator, independent of any employers and the investment manager of the fund. This would be necessary to ensure safe custody of the scheme assets.
11. Pension schemes would have an auditor and would be required to submit annual audits.
12. The scheme administrator would ordinarily seek advice from professionals (such as economists, actuaries and pension consultants) on the adequacy of contributions. This is necessary to ensure tax neutrality over the life cycle
13. Pension fund management groups would operate on a similar basis to unit trusts as in
the UK (or mutual funds in the USA). They would collect, pool, and invest contributions on behalf of individuals. In return, the individual would be allocated accumulation units whose transfer values (calculated on the basis of single pricing) are published on a daily basis.
14. Charges must be kept low and not be frontloaded.4 There should not be a high initial fixed costs that in effect ties an individual to a particular (and possibly inefficient or uncompetitive) organisation providing particular services such as fund management. To this end, pension fund managers should be encouraged to
invest in passive index funds with a consequent reduction in costs or to accept performance-related fees.
15. Pension-scheme members would be provided with full and regular information about their schemes in precisely the same way that shareholders receive information about their companies. The information would cover:
· the status of employee and employer contributions into the scheme;
· the value and type of assets in the pension fund;
· the rates of return generated on the assets;
· the fees or commissions charged by the scheme administrator and pension
fund manager.
· an estimate of the weekly pension that the current value of the assets can
be expected to buy at normal retirement age.
Summary information on scheme structure and performance would be made
publicly available.
16. The pension industry would be supervised by a pensions regulator who would also operate a compensation scheme to compensate scheme members in the event of fraud or malpractice. The compensation scheme would be financed by a levy on all pension schemes. The regulator should also be responsible for implementing a one-stop dispute-resolution system for all privately organised pension schemes (as recently suggested by the (Office of Fair Trading 1997)).

Direct Tax Code (DTC): Highlights and Impact

The New Direct Tax Code (DTC) is said to replace the existing Income Tax Act of 1961 in India. DTC bill was tabled in parliament on 3oth August, 2010. There are big changes now in monsoon session and There are now much less benefits as compared to what were in the original proposal.
During the budget 2010 presentation, the finance minister Mr. Pranab Mukherjee reiterated his commitment to bringing into fore the new direct tax code (DTC) into force from 1^st of April, 2011, but same could not be fulfilled.
Again, as per budget presented on 16th March, 2012, Implementation of Direct tax code has again been deferred and won’t be applicable from 1st April, 2012. Also check out changes in taxation in 2012 budget.

Highlights of Direct Tax code

1. Removal of most of the tax saving schemes: DTC removes most of the categories of exempted income. Unit Linked Insurance Plans (ULIPs), Equity Mutual Funds (ELSS), Term deposits, NSC (National Savings certificates), Long term infrastructures bonds, house loan principal repayment, stamp duty and registration fees on purchase of house property will loose tax benefits.
2. New tax saving schemes: Tax saving based investment limit remains 100,000 but another 50,000 has been added just for pure life insurance (Sum insured is atleast 20 times the premium paid) , health insurance, mediclaims policies and tuition fees of children. But the one lakh investment can now only be done in provident fund, superannuation fund, gratuity fund and new pension scheme (NPS).

3. Tax slabs: The income tax rates and slabs have been modified. The proposed rates and slabs are as follows:

Annual Income	Tax Slab
Up-to INR  200,000 (for senior citizens 250,000)	Nil
Between INR 200,000 to 500,000	10%
Between INR 500,000 to 1,000,000	20%
Above INR 1,000,000	30%

Men and women are treated same now
4. Home loan interest: Exemption will remain same as 1.5 lakhs per year for interest on housing loan for self-occupied property.
5. Short and long term gains: Only half of Short-term capital gains will be taxed. e.g. if you gains 50,000, add 25,000 to your taxable income.
Long term capital gains (From equities and equity mutual funds, on which STT has been paid) are still exempted from income tax.
6. EEE and EET: As per changes on 15th June, 2010, Tax exemption at all three stages (EEE) —savings, accretions and withdrawals—to be allowed for provident funds (GPF, EPF and PPF), NPS (new pension scheme administered by PFRDA), Retirement benefits (gratuity, leave encashment, etc), pure life insurance products & annuity schemes. Earlier DTC wanted to tax withdrawals.
7. Education Cess: Surcharge and education cess are abolished.
8.  Income arising from House Property: Deductions for Rent and Maintenance would be reduced from 30% to 20% of the Gross Rent. Also all interest paid on house loan for a rented house is deductible from rent.
Before DTC, if you own more than one property, there was provision for taxing notional rent even if the second house was not put to rent. But, under the Direct Tax Code 2010 , such a concept has been  abolished.
9. LTA (Leave travel allowance): Tax exemption on LTA  is abolished.
10. Education loan: Tax exemption on Education loan to continue.
11. Corporate tax: Corporate tax reduced from 34% to 30% including education cess and surcharge.

12. Taxation of Capital gains from property sale : For sale within one year, gain is to be added to taxable salary.
For long term gain (after one year of purchase), instead of flat rate of 20% of gain after indexation benefit, new concept has been introduced. Now gain after indexation will be added to taxable income and taxed at per the tax slab.
Base date for cost of acquisition has been changed to 1st April, 2000 instead of earlier 1st April, 1981.
14. Medical reimbursement : Max limit for medical reimbursements has been increased to 50,000 per year from current 15,000 limit.
15. Tax on dividends: Equity mutual fund will attract 5% dividend distribution tax (DDT). DDT has been removed from debt and non-equity based mutual funds but now dividends on non-equity funds will be taxable in investor’s hand as per his slab rates. There will also be a TDS 0f 10% (20% in case of NRI and companies)  if dividend is more than 10,000 Rs for non-equity funds.
15. News for NRIs : As per the current laws, a NRI is liable to pay tax on global income if he is in India for a period more than 182 days in a financial year. But in new bill, this duration has been changed to just 60 days.
An NRI will be deemed as resident only if he has also resided in India for 365 days or more in the preceding four financial years, together with 60 days in any of these fiscal years.  Even if an NRI becomes a resident in any financial year, his global income does not immediately become liable to tax in India. Global income would become taxable only if the person also stayed in India for nine out of 10 precedent years, or 730 days in the preceding seven years.
This is very unfair to Seafarers. To avoid any income tax, an Indian sailor employed with a foreign ship will have to stay maximum for 60 days in India.

What is DIRECT TAX CODE?

The Direct Taxes Code (DTC) is said to replace the existing Indian Income Tax Act, 1961. If approved, the DTC shall come into force on the April 1, 2012, and shall be applicable for income earned during the financial year 2012-13. Although below expectations, experts see proposals as largely positive.

Highlights of the Direct Taxes Code bill by Kalyan

• Common threshold Income Tax exemption limit for men and women proposed at Rs. 2 lakh per annum (proposed), up from Rs. 1.8 lakh
• 10 per cent tax on annual income between Rs. 2-5 lakh, 20 per cent on between Rs. 5-10 lakh, 30 per cent for above Rs. 10 lakh
• Tax burden at highest level will come down by Rs. 41,040 annually
• Proposal to raise tax exemption for senior citizens to Rs. 2.5 lakh from Rs. 2.4 lakh currently.(NOTE:- Union budget 2011-12 already has proposed it.)
• Corporate Tax to remain at 30 per cent but without surcharge and cess.
• MAT to be 20 per cent of book profit, up from 18.5 per cent.
• Proposal to levy dividend distribution tax at 15 per cent.
• Exemption for investment in approved funds and insurance schemes proposed at Rs. 1.5 lakh annually, against Rs. 1.2 lakh currently
• Proposed bill has 319 sections and 22 schedules against 298 sections and 14 schedules in existing IT Act.
• Once enacted, DTC will replace archaic Income Tax Act.
• However, many provisions in Income Tax Act will be a part of DTC as well.
• FBT will be charged to the employee rather than the employer.

Salient features

• DTC removes most of the categories of exempted income. Equity Mutual Funds (ELSS), Term deposits, NSC (National Savings certificates), Unit Linked Insurance Plans (ULIPs), Long term infrastructures bonds, house loan principal repayment, stamp duty and registration fees on purchase of house property will lose tax benefits.
• Only half of Short-term capital gains will be taxed
• Surcharge and education cess are abolished.
• For incomes arising of House Property: Deductions for Rent and Maintenance would be reduced from 30% to 20% of the Gross Rent. Also all interest paid on house loan for a rented house is deductible from rent.
• Tax exemption on Education loan to continue.
• Tax exemption on LTA (leave travel allowance) is abolished.
• Taxation of Capital gains from property sale : For sale within one year, gain is to be added to taxable salary .
• Tax on dividends: Dividends will attract 5% tax.
• Medical reimbursement : Max limit for medical reimbursements has been increased to rupees 50,000 per year from current rupees 15,000 limit.

Five budget highlights for financial planners;

Contribution by sadique neelgund , Hemant beniwal
 Budget highlights for financial planners;

1) Rajiv Ghandi Equity Savings Scheme – Locking period of 3 – Rs. 50000 limit
2) Tax slabs upto 2 L-nil, 2 L to 5 L – 10%, 5 L to 10 L – 20%, 10 L plus – 30%
3) Interest from savings bank account up to Rs 10,000 not to be taxed
4) Upto 5000 tax relief for preventive health checkups
5) Service tax increased from 10% to 12% - Financial Planning fees increases
6)Securities Transaction Tax (STT) reduced from 0.125 per cent to 0.1 per cent.
7)Capital gains tax on residential property exempted if sale proceeds used for SMEs.
8)Maximum Tax saving of Rs. 22,660 for all whose income is 10 lakhs and above

Here are the highlights of the Budget.

Here are the highlights of the Budget.

The Budget identifies five objectives relating to growth recovery, private investment, supply bottlenecks, malnutrition and governance matters
GDP growth to be 7.6 per cent (+ 0.25 percent) during 2012-13
Amendment to the FRBM Act proposed as part of Finance Bill. New concepts of "Effective Revenue Deficit" and "Medium Term Expenditure Framework" introduced
Central subsidies to be kept under 2 per cent of GDP; to be further brought down to 1.75 per cent of GDP over the next 3 years.
Proposed: Mobile based fertilizer management system; LPG transparency portal; scaling up and rolling out of Aadhar enabled payment for government schemes in at least 50 districts.
Rs. 30,000 crore to be raised through disinvestment
Efforts to reach broadbased consensus on FDI in multi-brand retail
Rajiv Gandhi Equity Saving Scheme: to allow income tax deduction to retail investors on investing in equities
Rs. 15,888 crore to be provided for capitalization of public sector banks and financial institutions
A central "Know Your Customer" depository to be developed
Swabhimaan: remaining habitations to be covered; to be extended to more habitations; ultra small branches to be set up in Swabhimaan habitations
Efforts to reach broadbased consensus on FDI in multi-brand retail Rajiv Gandhi Equity Saving Scheme: to allow income tax deduction to retail investors on investing in equities

Rs. 15,888 crore to be provided for capitalization of public sector banks and financial institutions
A central "Know Your Customer" depository to be developed

Swabhimaan: remaining habitations to be covered; to be extended to more habitations; ultra small branches to be set up in Swabhimaan habitations

Investment in 12th Plan in infrastructure to go uptoRs. 50,00,000 crore; half of this is expected from private sector
Tax Free Bonds of Rs. 60,000 crore to be allowed for financial infrastructure projects
Allocation of Road Transport and Highways Ministry enhanced by 14 per cent to Rs. 25,360 crore
Financial package of Rs. 3,884 crore for waiver of loans to handloom weavers and their cooperative societies; mega handloom clusters in Andhra, Jharkh#8743 weaver service centres in Mizoram, Nagaland and Jharkhand ; powerloom mega cluster in Maharashtra; Rs. 500 crore pilot schemes for geo-textiles in North-Eastern region
Rs. 5,000 crore India Opportunities Venture Fund to help small enterprises
Allocation to agriculture enhanced; RKVY gets Rs. 9,217 crore; BGREI gets Rs. 1,000 crore; Rs.2242 crore project to improve dairy productivity; Rs. 500 crore for coastal aquaculture
Various other agricultural activities merged into 5 missions
Target for agricultural credit raised to Rs. 5,75,000 crore
Interest subvention for short-term crop loans to farmers at 7 per cent interest continues; additional 3 per cent for prompt paying farmers
Rs. 200 crore for awards to incentivise agricultural research
Provisions under rural housing fund increased to Rs. 4,000 crore from Rs. 3,000 crore
Interest subvention of 1 percent on housing loans uptoRs. 15 lakh extended for one more year
AIBP allocation raised by 13 per cent to Rs. 14,242 crore
National Mission on Food Processing to be started in cooperation with State Governments
Scheduled Caste Sub Plan allocation increases by 18 per cent to Rs. 37,113 crore; Tribal Sub Plan by 17.6 per cent to Rs. 21,710 crore
Multi-sectoralprogramme to address maternal and child malnutrition in 200 high burden districts
58 per cent rise in allocation to ICDS, at Rs. 15,850 crore
Rural drinking water and sanitation gets 27 per cent rise in allocation to Rs. 14,000 crore; PMGSY gets 20 per cent rise to Rs. 24,000 crore
Projects covering length of 8800 km to be awarded under NHDP against 7,300 km during 2011-12
RTE-SSA gets Rs. 25,555 crore allocation, showing an increase of 21 per #162 6000 schools to be set up at block level as model schools in the 12th Plan; Credit Guarantee Fund to be set up for better flow of credit to students

Health insurance - A necessity- My own experience

Authored By: Ajit Panicker

"This incidence which i experienced few weeks back, was that my wife got into a medical emergency which required a surgical operation and the doctor who was treating her wanted to operate her in one of the international hospitals in New Delhi. Understanding the risk which our life carries every moment, and i being in this field to help others understand the importance of insurance, had taken a health insurance policy for my wife too from MAX BUPA health insurance co. ltd.
The health insurance program had made the entire process of admission , operation, stay and billing so seamless, that i did not even realize that my wife was in a big trouble. all the while i was sitting besides her without thinking even for a moment that how would i settle the bills. Thank you max bupa and than you health insurance."

 “Health is Wealth”. It is not a meaningless saying as it defines a very important fact of life. Your health is the most precious wealth that God has given you. It is your own property and you are the sole owner of it. Therefore, it is your responsibility to look after it properly. However, it is also true that the life is full of uncertainties and you never know what will happen in the next few hours. Therefore, it is also your duty to make certain arrangement so that you can take care of yourself as well as your family even if some misfortune falls upon you.
 This health insurance program, as the name itself tells, is entirely meant for the proper care of your body and health. It is a permanent arrangement that you can avail at a time when you need to undergo some serious health disorder. These health disorders are very expensive by nature and you may need the help from some sources to meet the expenses of this treatment. As you all know, the cost of medical treatment has become very costly and a person from the lower or middle income group cannot think about such a costly treatment.
A health insurance program is a service of the insurance companies that keeps your ensured against any serious illness like cancer. If, unfortunately, you happen to suffer from this serious disease ever in your life, you would not be worried about the cost of treatment as you can get the sum for treatment. As far as success of treatment is concerned, it is not sure, however, your family gets a huge sum of money if you happen to die in the process of your treatment.
The advantage of this health insurance program is very unique. You need not spend a penny from your pocket and the whole cost of treatment is borne by the insurance company. It is a great relief for the members of your family as well because they need not worry about your treatment. A health insurance program is a very useful investment because it helps you at the time when you need the money most. If you do not have the health insurance program for yourself, then you will be in deep trouble when a situation like occurs in front of you and leaves you in want of a huge sum of money.
Therefore, everyone should go for health insurance program. There are many such programs lying with different insurance companies and you need to choose the best health insurance program that suits your situation in the best possible manner. If you have not insured your health till now, then start the proceedings today and contact the representative of the best insurance company. It is your responsibility and you should not ignore it even for a single moment. Get insurance for your health today and see what relief it brings to you and your family.

BUDGET 2012 LIVE COVERAGE: Tax exemption limit increased to Rs 2 lakh

At 1230 hrs, the 30-share BSE Sensex is up 53 points at 17,729.09, a gain of 0.30%.
The NSE Nifty is up 20 points at 5,400.25, a gain of 0.37%.
Indirect Taxes
Pranab has increased the service tax from 10 per cent to 12 per cent; double whammy to the services sector. All services excepting those in the negative list will be taxed. This increase in service tax will result in Rs 18,660 cr of additional revenues.
Full exemption on custom duty on coal has been proposed

Pranab increases tax exemption limit to Rs 2,00,000 from 1,80,000. Senior citizens will have to pay no advance tax while there wil be no change in tax rates for corporates 

Upto 2,00,00 - Nil
2,00,000 - 5,00,00 - 10%
5,00,00 - 10,00,00 - 20%
Above 10,00,00  - 30%


"Life of the Finance Minister is not easy. I must be cruel to be kind" Pranab quips

Tax on stock trading has been reduced.The cut in STT the stock exchange toll fee for buying and selling share is cut by 20 percent. Just crumbs for traders

Fiscal deficit for FY12 stand at 5.9%.
NEW SAVINGS SCHEME FOR TAX BENEFIT!

The finance minister said that a new equity-linked savings scheme, named after former prime minister Rajiv Gandhi, will offer income tax deduction of up to 50 per cent for those who invest Rs 50,000 in the stock market. However, only those whose annual income is less than Rs 10 lakh will be eligible for the tax deduction.
In a  bid to increase India's literacy rate the FM proposes to set up 6,000 schools in 12th Five-Year Plan.  Rs 25,555 cr will be allotted for Right to Education in FY13. The FM also cuts interest rates on loans to women self help groupsThe government is considering issuing Resident i cards to all individuals above the age of 18 years to help in e governance procedure. Allocation toward UID will be at Rs 14,232 crore in FY13.

AGRICULTURE
The plan outlay for agriculture has been raised by 18% to Rs 20,208 crore in FY13. Irrigation and dams will be eligible for special funding, says the Finance Minister
The bank index extended gains to more than 2 percent after Pranab Mukherjee said the government will provide nearly Rs 160 billion capital infusion in state-run banks in fiscal year 2013 that starts in April.
The FM proposes  Rs 12,040cr for backward area projects and  Rs 14,000cr for rural drinking water and sanitation in FY13.


Retail stocks rise as the finance minister commits to multi-brand FDI in his budget speech. Shopper's Stop up 3.3%, Pantaloon up 1.5%, Trent rises 1.8%.

Market now slipping off day's highs as no major announcement on subsidy cuts

FM promises tax incentive for new investors. A good move, considering that the share of household savings invested into the stock markets has declined. However, it remains to be seen if this works for the markets. Markets seem to be happy: The Sensex is at 17,796.19 points, up +120.34 (0.68%), while the NSE Nifty is at 5,423.10  points, up +42.60 (0.79%).
 AVIATION SOPS
The finance minister said that the move to allow foreign airlines to participate direct or indirectly in India being considered actively. The plan to allow foreign airlines to invest up to 49% in domestic airlines is being considered actively too. External commercial borrowings to the extent of $1 billion to be allowed for aviation sector for next year. Aviation sector stocks however remain limp, showing hardly any movement.
Micro-finance Institution Regulation Bill, National Housing Bank Regulation Bill, Bank Regulation Bill and Public Debt Management Bill likely to be passed this session. The finance minister also proposes to recapitalise banks -- rural, urban and argiculture-related banks -- to the extent of Rs 15,000 crores.
11:35 pm: Sensex at 17858, up 182 points,
Good news for investors: Changes in IPO norms will also be introduced which will increase participation in small towns

The finance minister seeks to bring down subsidies to a level of 1.7% of the GDP over the next three years. He also plans to roll out a computerised scheme for transfer of fertilizer subsidy.

The finance minister assured the Lok Sabha that he plans to implement the Direct Taxes Code "at the earliest". Speaking about the Goods and Services Tax, he said that GST would be operational by August 2012.
The Finance Minister has allotted  Rs 15,888 cr for capitalisation of PSUs.

RETAIL SOPS

Pranab announces sops for new retail investors under the Rajiv Gandhi Equity Scheme. The  Rajiv Gandhi Equity Scheme that is to be introduced will have lock-in period of 3 years - details of which the FM says would be announced in due course.

An Income Tax deduction of 50 per cent on investments of up to Rs 50,000 in savings scheme named after Rajiv Gandhi has been proposed. Efforts are being made to arrive at broadbased consensus with state governments on allowing FDI in multi-brand retail up to 51 per cent, says FM.


The finance minister seems to have begun on a note that might get the hopes of the industry up a bit. He spoke about reforms, driving up growth, fighting corruption and the menace of black money. He also mentions the need to follow a roadmap that would help the nation arrive at the various checkpoints on time and in a planned manner.So will be bite the bullet and push through the reforms? Let's listen further...
Disinvestment
The FY13 divestment target is pegged at a whooping Rs 30,000 crore, Pranab proposes. The government's stake in PSUs where sell-off is decided would not be less than 51%.
Rate hikes hit growth
The Reserve Bank's hawkish stance has hit India's consumption and growth. The Finance Minister, however, promises lower inflation number and expects to narrow the fiscal deficit gap. The economy has been steadily turning around and manufacturing appears to be on revival, he adds.

India stands tall amidst crisis
Performance this year was disappointing but as compared to peers India was better. Middle East crisis, debt worries in EU have intensified.

The FM says he will focus on five broad issues:
1. Focus on domestic investments and driving up growth
2. Stress on rapid revival in private sector investment.
3. Emphasis on removing supply die bottlenecks in sectors like agriculture, energy, etc.
4. Make timely intervention to address the scrourge of malnutrition in certain disctricts of the country.
5. Expedite coordinated efforts to improve governance, transperancy and address the problem of black money.
At 1110 hrs, the Sensex is up 82 points at 17,758.28, a gain of 0.47%. The NSE Nifty is up 31 points at 5,401.55, a gain of 0.39%.  The market is keeping its fingers crossed.
 "We have to improve the supply side management of the economy. Mere words are not enough and we need to take some action," says Pranab

Pranab Mukherjee has started presenting the his seventh budget amid a lot of din in Parliament.
This year has been one a year of recovery interupted, Pranab says. Despite global recession, Indian economy has been growing at an impressive pace, says the finance minister.  However he agrees that the global economic crisis has affected India.

Finance Minister Pranab Mukherjee has already arrived in Parliament and is ready to present his Budget. Of course, he stopped over at the Rashtrapati Bhavan to meet President Pratibha Patil


Meanwhile, the stock market is waiting with bated breath for the FM’s budget proposals. The Sensex at 10.48 am is at 17,745.59 points, up +69.74 (0.39%), while the NSE Nifty is at 5,409.10 points, up +28.60 (0.53%). So what can the FM do?  Will he give a push to the reforms process? Or will he make this one a populist budget given the trouble that the UPA-2 finds itself in today?

TAX RATES TO GO UP?

News reports suggest that the finance minister could increase the income tax exemptions available to the common man, but others speculate that the tax rates could even be hiked.
For those of you who are wondering what this Budget is all about and how it's important to you. Click here
Even as the General Budget is to be presented in just a couple of minutes, the drama over the Railway Budget continues. Also, the DMK MPs too are absent and are not attending Parliament. Apparently, they are readying for the by-polls.
 

The Budget will be presented against a backdrop of slowing economic growth and a soaring fiscal deficit. GDP growth for fiscal year 2011-12 is expected to be at a mere 6.8 per cent, the lowest in three years.

Warren Buffett, chairman and CEO, Berkshire Hathaway-The Best Advice They Ever Received

Warren Buffett, chairman and CEO, Berkshire Hathaway

Berkshire Hathaway director Thomas Murphy told him:
"Never forget Warren, you can tell a guy to go to hell tomorrow — you don't give up the right. So just keep your mouth shut today, and see if you feel the same way tomorrow."
From a 2010 interview with Yahoo!

Bill Gates, chairman, Microsoft

"Warren Buffett has taught me a lot of things, but he got me thinking very early on that at some point I'd have the opportunity and responsibility to give the wealth back.

"And so, literally decades before the foundation got started I was reading about philanthropists from the past … what they'd done and how it worked."

From a 2012 interview with ABC News

Howard Schultz, CEO, Starbucks

"Jim Sinegal, the founder of Costco, gave me fantastic advice because we were going down the wrong track. We brought him in to look at our plan and he said, 'You know, I don’t want to be rude but this is exactly the wrong thing to do.' This was my idea, and he was right.

"His advice was the cost of losing your core customers and trying to get them back post-recession would be much greater than trying to find new customers, so we completely shifted."

From a 2011 interview with The Entrepreneurs' Organization

Jim Rogers, chairman, Rogers Holdings and Beeland Interests

"Buy low and sell high. When I went to Wall Street. Actually all the old guys used to say 'Figure out the money and you’ll figure out what’s going on.'"

From a 2012 interview with Business Insider

Richard Parsons, former chairman, Citigroup

Steve Ross, the former CEO of Time Warner, told him:

"Just remember, it's a small business and a long life. You're going to see all these people again."

From the 2008 HACR Roundtable

Eric Schmidt, executive chairman, Google

"Find a way to say yes to things. Say yes to invitations to a new country, say yes to meet new friends, say yes to learn something new. Yes is how you get your first job, and your next job, and your spouse, and even your kids."

 

Sheryl Sandberg, COO, Facebook

when

Sandberg was thinking she wouldn’t accept an offer to be Google’s general manager, Eric Schmidt told her, “Stop being an idiot; all that matters is growth.” She says that’s the best advice she ever got.

 

Larry Page, co-founder, Google

In graduate school at Stanford University, I had about ten different ideas of things I wanted to do, and one of them was to look at the link structure of the web. My advisor, Terry Winograd, picked that one out and said, 'Well, that one seems like a really good idea.' So I give him credit for that."

 

Jennifer Hyman, CEO and co-founder, Rent The Runway

"Just do it. There's no benefit to saying, 'I'm just doing this because it will get me to this new place,' or 'I'm just going to go into this analyst program because it will prep me for X.'

"If you're passionate about something, go for it, because people are great at what they love and when they're the happiest."

From a 2011 interview with The Huffington Post

Edward Rust Jr., chairman and CEO, State Farm

"[My father] had the uncanny ability with just a couple of little phrases. One: 'You know better… don't you,' and 'you can do better… can't you.'"

From the 2008 HACR Roundtable

Joe Uva, former CEO, Univision

Uva's boss early on in his career at McCann Erickson told him:

"Always have the courage of your convictions. Always state what's on your mind. Follow your gut. And observe what other people are doing around you."

From the 2008 HACR Roundtable

 

Mohamed El-Erian, CEO and co-chief investment officer, PIMCO

"I remember asking my father, 'Why do we need four newspapers?' He said to me, 'Unless you read different points of view, your mind will eventually close, and you'll become a prisoner to a certain point of view that you'll never question.'"

From a 2009 interview with CNN Money

 

Kenneth Burdick, president and CEO, Blue Cross & Blue Shield of Minnesota

Burdick received this message from various successful people he has met:

"Surround yourself with good people. And part of that is surrounding yourself with people who think differently than you. Surrounding yourself with people who have different experiences than you. In business, it's all about the team."

From the 2008 HACR Roundtable

 

Steve Schwartzman, chairman and CEO, Blackstone Group

"[My high school] coach, a 50-year-old named Jack Armstrong ... would shout, 'Remember—you’ve got to make your deposits before you can make a withdrawal!' ...
"Coach Armstrong came to mind in one of my first weeks on Wall Street, 35 years ago. I’d stayed up all night building a massive spreadsheet to be ready for a morning meeting. ... The partner on the deal, however, took one look at my work, spotted a tiny error, and went ballistic.
"As I sat there while he yelled at me, I realized I was getting the MBA version of Coach Armstrong’s words. Making an effort and meeting the deadline simply weren’t enough."
From a 2008 blog post at Harvard Business Review

Peter Swinburn, president and CEO, Molson Coors

The then-big boss asked me to go and do basically a turnaround job. And he said, 'I don't mind what you do, as long as you don't do what we've done before.'"

From the 2008 HACR Roundtable

BONUS: Ben Silberman, co-founder, Pinterest

"Don't take too much advice. Most people who have a lot of advice to give — with a few exceptions — generalize whatever they did. ...
"Every company carves its own path, and [founders] are under pressure to make their startups look like the last successful company everyone remembers."

The budget should retain tax benefit on ELSS: S. Naren, CIO-Equity, ICICI Prudential AMC

Sankaran Naren, CIO-Equity, ICICI Mutual Fund, feels that the upcoming budget should retain tax benefits on ELSS to ensure mutual funds have a deeper penetration.

What key priorities and concerns should the budget address?

The most important and crucial area is clearly going to be a road map for fiscal consolidation. Fiscal consolidation will be imperative for providing comfort to RBI on initiating monetary easing through rate action. Also, increased focus on investment in infrastructure by utilizing revenue received through effective taxation and disinvestment will benefit the economy and facilitate growth sustenance.

What measures do you think are needed to make our capital markets stronger?

Removal of STT for equity markets will help the capital markets by increasing and improving return potential. This apart, any initiatives towards economic growth will have an impact on long term capital markets as well by way of increased participation.

With mutual funds still accounting for a tiny fraction of household savings, what needs to be done to make MFs, from a policy perspective, to widen their reach?

Mutual funds today are one of the best investment options for retail investors to participate in equity markets and, at the same time, partner in India’s growth story. From the budget perspective, policies that encourage investments in mutual funds like retaining tax benefits in ELSS will help maintain and improve penetration of mutual funds over the long term.

Tax structure should be rationalized for small investors in mutual funds: Sundeep Sikka

Sundeep Sikka, CEO, Reliance Mutual Fund feels that the 2012 budget should rationalize tax structure to encourage long-term savings in equity markets through mutual funds.

What key priorities and concerns should the budget address?

The recent Q3 figures were certainly lower than expected. Domestic economy is facing headwinds from high inflation, high interest rate, anemic investment, series of government scandals, slow pace of market-friendly reforms and poor confidence against the backdrop of dismal global outlook. The growth in the next fiscal will also remain around 7%, unless RBI starts slashing rates and government rolls out reforms along with some fiscal consolidation.

This can definitely create hurdles in the India growth story. However, I am very hopeful as India has great potential. The government must take timely action so that investor sentiment is not affected.

The key issues that the budget should address is injecting growth stimulus to maintain stability in growth.

What measures do you think are needed to make our capital markets stronger?

Money from institutional investors is one of the key factors responsible for market volatility and liquidity. I strongly believe that encouraging long-term savings from retail investors in asset classes such as equity, debt and gold will be the right step in bringing stability to the capital markets.

With mutual funds still accounting for a tiny fraction of household savings, what needs to be done to make MFs, from a policy perspective, to widen their reach?

Overall, though salaries of the common man have increased, inflation has resulted in the decliningvalue of money. The government needs to focus more on rationalization of tax structure in favour of small, individual investors to long-term savings in equity markets through mutual funds.

Tax breaks needed in retirement, children’s savings and health care: Harshendu Bindal

Harshendu Bindal, President – Franklin Templeton Investments (India), suggests that documentation for investing in mutual funds should be relaxed by enabling the use of UID cards so that people who don’t have PAN cards can invest in MFs.

What key priorities and concerns should the budget address?

Given the current macro-economic scenario and recent poll election results, this year’s budget will be closely followed for an insight into the government’s stance on various pending reforms, steps towards fiscal consolidation and policy measures to facilitate a recovery in capex cycle. The roadmap on fiscal consolidation is crucial as it holds implications for monetary policy, as clearly indicated by RBI. It will need to be seen how the government strikes a balance between spending on inclusive growth initiatives and moving forward on fiscal agenda.

Other areas needing attention include tackling supply bottlenecks, pushing up inflation and infrastructure, along with reforms to attract FDI flows, bolstering talent pool and labour reforms. There is likely to be an increased investor focus on the fine print for clarity on implementation of various announcements and their underlying assumptions. The government is likely to augment revenues through expansion of tax net and increase in indirect taxes. Increase in tax exemption limits for individuals could be used as a tool to boost private consumption. Any tax breaks to encourage savings into basic needs such as retirement, children’s education and health will be a positive.

What measures do you think are needed to make our capital markets stronger?

While the household savings rate is high in India, most of these savings find their way into unproductive physical assets such as gold and real estate. And while there has been a gradual increase in the share of financial assets, this could be further encouraged by providing tax benefits to channel the high savings into capital markets and financial institutions such as bank, mutual funds and insurance, and also to fund infrastructure development. Such efforts can reduce India’s dependence on foreign capital flows and help expand the investor base.

Another aspect is enhancing the market regulatory and infrastructure framework for corporate bond markets in India. A liquid bond market can help companies reduce their financing costs and also help them raise long term funds. Higher participation and liquidity can be brought about by doing away with investment restrictions on pension funds and insurance companies – these entities play a key role in developed markets and are also critical for financing long-term infrastructure development programmes – as well as reduction/ rationalization of the stamp duty structure for bond issuances.

With mutual funds still accounting for a tiny fraction of household savings what needs to be done to make MFs, from a policy perspective, to widen their reach?

There are mainly three things that can help increase industry penetration:

Enhance financial awareness – there is clear need for increasing awareness for various financial products amongst masses and policy should adopt D. Swarup Panel recommendation to set up FINWEB (Financial Well-Being Board of India).

Relaxation of documentation norms – enabling usage of UID cards apart from PAN cards for the purpose of documentation will help, given that a large chunk of the population does not pay taxes and therefore does not have a PAN card.

As mentioned earlier, tax breaks for retirement, children’s savings and health care investing, as is the case in the West would be useful. This would encourage financial planning and savings for important life stage needs of all investors.

How is the proposed borrowing programme in budget likely to affect bond markets? What would be its impact on debt funds?

It is difficult to predict the exact quantum of government borrowings for FY13. In our view, the government is cognizant of the economic benefits that would trickle through from fiscal consolidation and would look to augment revenues as well as curb expenditure where possible. Revenues could get a boost from telecom auctions. On the flip side, the situation will be keenly tracked for impact from Food Security Bill and State Electricity Board losses. A credible fiscal consolidation plan will certainly help bond yields edge lower as well as strengthen the case for monetary policy easing.

In our view, given the current macro-economic situation, investors are better off investing in open-end fixed income funds. RBI is likely to wait for clarity on various factors before it cuts policy rates. Despite the weakening growth trends, RBI has been wary of reversing the rate hikes due to the high fiscal gap and structural supply-demand imbalances that are pushing up inflation. Policy statements indicate that the tightening cycle is behind us, though the timing of reversal rests on government efforts to control the fiscal deficit and sustainable moderation in inflation. The recent rise in international crude oil prices could push up inflation as also any efforts by the government to curb subsidy bill. Actively managed open-end funds would be better positioned than closed-end fixed maturity products in navigating the current uncertain environment and delivering superior, risk-adjusted returns.

Tax Slab this year should include the following- Win - Win Situation for all

Authored by: Ajit Panicker

The budget is round the corner and lot of speculation as well as proposals are being made , so that the tax slabs become a win win sitauation for all the stakeholders, including the individual income tax payee, the government , and others.
What was being initially proposed to give rebate for tax free income upto 5 lacs have been now proposed by the panels to allow no tax upto 3 lacs, 10% for 3-10 lacs slab, 20% for 10-20 lacs and 30% for 20+ lacs slab. This tax structure kind of appeals to provide benefits to all the sections of the society, on a good equitable distribution with lower income group also benefitting substantially, which was lacking in the tax structure presently being used.
the comparison with the last years slab would provide say for an income tax payee(male) with 7 lacs p.a  following benefits- if the investment limit which provide tax rebate is increased from 1 lacs to 1.5 lacs, so there would be no tax for 4.5 lacs if a person has made investment and claimed rebate for 1.5 lacs,  and only 10% on rest 2.5 lacs which would be just 25000 rs.
If  done last year, the same condition would provide- 1 lacs of investment rebate + 1.6 lacs no tax, would ask for 10% on 5.0- 2.6 lacs(2.4lacs), 24000 as tax + 20% on 7.0- 5.0 lacs =40000, in total 64000, which calls for a huge tax to be paid by the individual.
Lets see , after the political upheavals which has happened in the recent polls, what would the central government be placing the budget and the DTC - as.

Last minute tax planning done is like gulping a hot cup of coffee in one go

Authored by: Ajit Panicker

Nowdays, the clients who belong to the salaried class try to complete their tax planning much on time and even file teir taxes on time. Many believe that they are abreast with the required information about tax planning. But i doubt is that much sufficeint. After having serviced so many clients in my professional life till now what i have largely observed is that, 90% of the employees of even large firms do feel that the last minute tax planning which they do so as to furnish the proofs for the tax declaration done in the beginning of the year is what is tax planning, and this tax planning they assume to be their investment planning.
This article is seriously dedicated to all the salaried employees who file taxes and hence purchase the products which come their way at the last moment.
when you declare the investments in the begiining of the year, almost all the employees try to declare the limits under various sections of the income tax, so as to avail the maximum tax advantage. They do so, so that the tax is not deducted monthly, and once they declare the same at the end of the year with proofs the tax deducted would not be a burden,
But what people do not realise is that, at the fag end of january or february when almost all the corporates ask for the investment proofs , many do not have all the proofs. Because the products which give you tax rebate have not been prrchased.
Then comes the herd of the insurance advisors, mutual fund advisors and whover approaches them or they get hold of someone, the product for tax planning is purchased, without realising that it may not fulfill their financial objectives.
The lesson to be taken here: please plan during the complete year, contact a professional financial planner who plans your cash flows, calculates your net worth, plans your protection, evaluates your existing investments , evaluates your exitsing health cover etc and then designs the plan according to the objective decided together by you and the planner.